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Industry Updates

Industry News Roundup: Amazon's First Changes To Whole Foods, Mcdonalds Modernizes The Drive-Thru, And More

Written by
Will Harmon

Amazon Cuts Whole Foods Prices on First Day of Acquisition

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The acquisition that disrupted the entire food industry finally went into effect on Monday, and Amazon wasted no time implementing their new changes. Amazon immediately sought to elminate Whole Foods' biggest consumer barrier, its prices. Whole Foods opened up the week by slashing the prices of several customer favorites by up to 43%. This anticipated change was announced late last week when news of the $13.7 billion acquisition became official.

Amazon has demonstrated that it is willing to invest to dominate the categories that it decides to compete in. Food retailers of all sizes need to look really hard at their pricing strategies, and maybe find some funding sources to build a war chest." -Mark Baum, senior vice president at the Food Marketing Institute

Cutting the price of avocados by nearly half wasn't even the most dramatic change of the day as Whole Foods opened their doors on Monday. Eager shoppers were greeted with towers of Amazon Echos and Echo Dots, marking a sharp redirect into the tech market for the organic grocery.

Amazon is looking to inject their services into Whole Foods in more ways than just selling their tech. Amazon is also slated to turn Amazon Prime members into a membership rewards program for shoppers. The details are still emerging, but here's what we know about what exclusive benefits Amazon Prime members will receive:

  • Special savings and in-store benefits that other customers will not be able to get.
  • Whole Food’s private label products – 365 Everyday Value, Whole Foods Market, Whole Paws and Whole Catch – will be available through Prime Pantry and Prime.
  • Ordering though Prime Now allows members to get free two-hour delivery in select cities and zip codes.
  • Amazon Lockers will be available at certain Whole Foods stores that will allow customers to pick up items ordered online through Amazon at their local Whole Foods store or send returns back.

Amazon made it clear that these are just the beginning of the benfits for consumers. Prices will continue to be lowered as the 2 massive brands merge.

Full article: Amazon Cuts Whole Foods Prices as Much as 43% on First Day

Starbucks Sued By Largest Mall Operator in the US

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Starbucks acquired Teavana, a US-based tea store, in 2012 for $620 million, which was Starbucks' largest acquisition at the time.

The suit has been filed by Simon Property Group Inc., the country's largest mall operator. Simon Property Group filed the suit shortly after Starbucks initiated their plan to close all 379 stores across the country, which Starbucks announced in July. Starbucks said the closures will mostly take place in the spring of 2018. Accoridng to Simon Property Group, Starbucks indicated that it intends to close the units no later than December 31, which is just one breach of contract that is mentioned in the suit. Per The Indianapolis Business Journal, the mall landlord said only two of its 78 Teavana leases expire prior to spring and the rest extend as far as January 2027.

The suit said many companies, such as Sears, Macy’s, and Sports Authority, have closed stores to avoid bankruptcy and “that staying open and fulfilling their leases would cause them financial ruin. That obviously is not the case with Starbucks, which is one of the largest and most recognized companies in the world,” the suit continued.

Unless Starbucks is under threat of brankruptcy, Simon Property Group suggests there are no legal grounds to shutter every Teavana mall location. Starbucks has mentioned it has no plans to remove Teavana from its shelves, and that the product remains popular in-store.

Full article: Starbucks Sued by Country's Largest Mall Operator

McDonald's is Changing the Way We Use the Drive-Thru

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McDonald's is launching mobile ordering/payment technology and curbside delivery at all 14,000 of its US restaurants by the end of 2017.

The disruptive change was announced on Wednesday during an investor meeting. McDonalds customers will be able finally skip the long drive-thru lines and enjoy curbside pickup through this new smartphone functionality. This is a strategy that's commonly employed at fast-food chains that experience frequent long lines which deters customers. In N' Out, for example, has always had employees equipped with tablet POS take orders from drivers stuck in a line of 20 cars.

In the 1970s, McDonald's revolutionized convenience in the drive-thru to make getting high-quality food easy. Now, that experience is being transformed once again.

Rolling out mobile order and payment options signals a massive shift for McDonald's, but one that we're seeing more and more restaurants make throughtout the industry. In fact, more than 70% of the fast-food chain's orders come through the drive-thru.

Full article: McDonald's Could Kill the Drive-Thru as We Know It

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